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A CEO for the Smithsonian

When speaking to groups, Lawrence Small has likened his move from a top corporate executive to head of the world's largest museum and research complex to a nonlawyer becoming Chief Justice of the Supreme Court. On Jan. 24, 2000, the former president and chief operating office of federal mortgage-lending institution Fannie Mae became the Smithsonian Institution's 11th secretary -- the first businessman ever to head what has become the world's most-visited museum since it was established in 1846. Before the arrival of Small, 60, the Smithsonian had always been led by scientists and scholars.

Some 20 months after taking over, Small is facing challenges on many fronts. He must obtain at least $1 billion over the next few years for repairs and renovations of some of the institution's buildings, which include 16 museums and galleries, the National Zoo, and research facilities. And he has to deal with critics who have bemoaned his management style and aggressive fund-raising, among other grievances. All the while, Small, a native New Yorker, has held steady, confident that his skills are what's needed to make the 155-year-old institution prosper in the 21st century.

HOT GUITARIST. Despite more than three decades in banking, Small hardly came to the Smithsonian as a corporate suit. He had worked at Citicorp/Citibank for 27 years, leaving as a vice-chairman, before going to Fannie Mae in 1991, where he spent about nine years. But he speaks several languages, thanks in part to a Spanish literature degree from Brown University, where he was elected to Phi Beta Kappa. A lifelong lover of the arts, he also plays flamenco guitar and collects Amazonian bird-feather art.

From a business standpoint at least, the Smithsonian's numbers are so far looking pretty good under Small's leadership. Visitors to its museums, galleries, traveling exhibitions, and the National Zoo last year hit a record 40 million -- more than the number flocking to the Louvre, British Museum, and Metropolitan Museum of Art combined. Private-sector contributions to the Smithsonian jumped 40%, to $206 million, last year, from $147 million in 1999. (The institution's $455 million 2001 budget is about 70% federally funded.)

Recently, Small chatted with BusinessWeek Online's Eric Wahlgren about what it's like to go from the private to the nonprofit sector -- and about some of his favorite items from among the Smithsonian's vast collection. Here are edited excerpts from their conversation:

Q: How does one prepare to make the switch from president and COO of Fannie Mae to secretary of the Smithsonian?

A: In asking a businessperson to lead the Smithsonian, the Board of Regents made a significant departure from tradition. They realized that the Smithsonian had taken on challenges involving billions of dollars and great complexity. And they needed to modernize. The institution needed to modernize its approach to managing itself. And they wanted someone with experience in managing a large, complex institution. And obviously, that's what I've had over many years.

Q: Why did you make the jump, and would you have done it earlier in your life if the opportunity had come up?

A: Well, I've always loved museums in general, and I've loved the Smithsonian in particular. And when I took this job, I agreed with the board that you've got to do everything possible to ensure that the Smithsonian has the public and the private-sector resources to carry out its mission for generations to come. And that's obviously a great challenge, and it's one that I couldn't resist taking on.

As to the second part of the question, I don't know whether I would have chosen this early in my life. I never considered it, and it never came up.

Q: What skills did you acquire in the private sector that came in handy for the Smithsonian job? And what were you not ready for?

A: The fundamentals of good management practices that I learned in business are also relevant in the nonprofit sector. Developing a clear vision, articulating that vision in measurable goals and objectives. Setting up systems to track progress. Building teams of top-quality people and making certain that their goals square with the goals of the institution. All of that is the same.

I guess I was surprised by all of the media attention that the Smithsonian gets. It's much more than in any other place I've ever worked. And it takes a while to get used to that.

Q: What advice would you give to someone in the industry wishing to make a similar jump?

A: The Smithsonian is such a unique institution that I'm not sure there's any advice I can offer to others. I think I'm here because of a confluence of time, place, the needs of the Smithsonian -- and my needs.

Q: How do you balance the need to raise money and operate the institution efficiently with the desire to maintain its cultural and scientific integrity?

A: I don't think raising money represents any conflict with the maintenance of cultural and scientific integrity. Throughout its 155-year history, the Smithsonian has relied on the generosity of private donors to help it fulfill its mission.

And today, given the financial demands on the federal government, we need the generosity of the private sector more than ever. The Board of Regents and I understand the importance of protecting the integrity, heritage, and reputation of the Smithsonian. And while we certainly will welcome all appropriate philanthropic support, we have policies in place to ensure that no donation compromises our institutional integrity. And I also think our donors recognize the importance of that as well.

Q: How do you respond to charges that the private donors to the Smithsonian have too much say in putting together exhibitions?

A: They do not. The regents and I care very much about the reputation and intellectual integrity of this institution, and we do nothing to compromise that. We rely on private donations for about 30% of our budget. The federal government provides the rest, and the Smithsonian and its staff always maintain absolute control over all programs and activities.

Q: You were hired to transform the Smithsonian into a 21st century operation. What's your vision for the institution, and how do you think you're doing so far?

A: Two of my main goals are to modernize the Smithsonian's major museums and their exhibits and to take the Smithsonian across the U.S. to hundreds of communities by lending objects from our collections to museums around the country. We're also building two new museums in Washington: The National Museum of the American Indian and the new Air & Space Museum at Dulles Airport. Both of these will add very significant knowledge to important chapters in American history.

And we're modernizing the institution's management systems -- the financial facilities and human resources. That will provide the support our scientists, our historians, and our scholars need to continue to do the world-class work that the Smithsonian is known for.

I think we're making great progress. Our attendance has hit record levels during the time I've been here. Our exhibits continue to receive critical acclaim. Our scientific research centers continue to do very important work. And our public and private-sector fund-raising has hit record levels. So I'd have to say there is really a lot of positive momentum here.

Q: You've taken flak for what some have called your top-down management style. How do you respond to your critics, and are you managing the Smithsonian any differently than the private-sector businesses where you worked?

A: The Board of Regents recognized the need here for effective management. And I would hope that that's what I've brought to the Smithsonian. If the Smithsonian institution is to do well in the 21st century, it needs to raise billions of dollars and demonstrate that it can use that money wisely and with great care and competence. And that's not only my job but also the job of everyone who works here.

Q: The Smithsonian has more than 140 million items. I know you're a collector. It must be quite a place to be. What are some of the more interesting objects that you've come across so far?

A: Well, my favorite objects are the humble but elegant lap desk -- a writing desk designed by Thomas Jefferson, on which he wrote the Declaration of Independence. And the Lockheed SR71 Blackbird airplane that flew across the U.S. from Los Angeles to our special hangar at Dulles airport in 68 minutes, which will be the centerpiece of our new Air & Space Museum. Both of these objects are symbols of America's special brand of innovation and daring. And I find them very inspiring.

Q: Very interesting. As you well know, the September 11 terrorist attacks have had a profound impact on America. I realize it may be premature, but is the Smithsonian considering a memorial or exhibit in light of these events?

A: Our National Museum of American History is in the process of discussing with the New York Historical Society the concept of what would make a proper exhibit, if one were to do something like that. So there are discussions under way. No decisions have been made.

We've also had in five of our different locations -- our American History Museum, our Air & Space Museum, Hirshhorn Museum, the Renwick Gallery, and the Smithsonian Castle -- books of reflections that were put out for people to write in their comments. And we now have on the Smithsonian Web site those reflections as well. So we've got background that has been put together on this. And we're moving with the New York Historical Society to think about how to do an exhibit.

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